Grain futures edge higher, corn rallies on increased demand

Grain futures advanced on Tuesday with corn gaining for the first time in three days as data showed that demand for suppliers in the U.S. increased, while crop quality decreased, compared to the preceding week.

On the Chicago Board of Trade, corn futures for September delivery traded at $5.4700 per bushel at 10:36 GMT, up 1.94% on the day. Prices held in range between days high and low of $5.4788 and $5.4038 a bushel respectively. The grain snapped a two-day losing streak, erasing this weeks decline after it settled 3.32% higher last week.

According to the U.S. Department of Agriculture, U.S. exporters sold 120 000 tons to unknown destinations in the year that starts September 1. The USDA said in its weekly crop progress report that corn silking fell far behind last years pace, standing at 16% as of July 14. That was above the preceding weeks 6%, but well below last years 67% during the comparable week and the five-year average reading of 35%.

The agency confirmed expectations for reduction in the total output to 13.95 billion bushels, down from 14.005. However, this is still an all-time record high.

As for the corn crop condition, crop quality as of July 14 was far better than last years, but worsened compared to the preceding week. As of July 14, 9% of the crop was categorized as “Very poor” and “Poor”, 25% as “Fair” and 66% was rated good-excellent. During the preceding week, 8% of the crop fell in the “Very poor” and “Poor” categories, 24% in “Fair” and the remaining 68% were rated as “Good” and “Excellent”.

Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a report today: “The combination of a better-than-expected U.S. export inspections report, another large U.S. corn export sale yesterday, and a slight downgrade to U.S. corn crop conditions.”

Wheat advances

Wheat advanced on the day, trading at $6.7813 per bushel at 10:37 GMT, up 1.27%. Prices varied between days high and low of $6.7838 and $6.7138 a bushel respectively. The grain settled lower on Monday, but Tuesdays gains trimmed the weekly decline to 0.5%.

The USDA said in its weekly crop progress report on Monday that as of July 14 67% of the winter wheat was harvested, compared to 57% in the preceding week, but below last years 81% and the five year average reading of 71%.

As for the spring wheat crop, 71% of the crop was headed as of July 14, well above the preceding weeks 45% and nearing the five-year average 73%. During the comparable week last year, 93% of the wheat was headed.

Spring wheat condition was overall better than the 2012 season, but slightly worse compared to the preceding week. As of July 14, 5% of the crop was rated very poor-poor, the same like the previous week, but below last years 8%. Meanwhile, 25% was categorized as “Fair”, compared to 23% in the preceding week and 27% in 2012. As for the premium quality, 70% of the crop was rated as good-excellent in the week ending July 14, compared to 72% in the preceding one and 65% a year earlier.

The U.S. Department of Agriculture said last week U.S. wheat reserves will total 576 million bushels at the end of the current marketing year on May 31, down from previous month’s estimate at 659 million bushels.

Analysts expected the agency to cut its forecast to 624 million bushels. The USDA said it expects exports to be 100 million bushels higher this year than previously forecast due to “strong sales, particularly to China”. U.S. export sales rose to 1.47 million tons in the week ending July 4, twice more than the previous week, as China purchased 1.02 million tons of wheat.

Soybeans advance

Soybeans also advanced today, hitting a new days high at $14.7575 at 10:26 GMT, marking a 1.47% daily gain. Days low stood at $14.5338. The August futures settled more than 1.5% higher on Monday and have advanced more than 3% so far this week, after declining 0.28% the previous one.

The USDA said in its weekly crop progress report that soybeans blooming advanced last week, but still fell behind the previous years pace. As of July 14, 26% of soybeans plants had bloomed, compared to 10% during the preceding week. This however was well below 2012s 63% reading and the five-year average of 40%.

As for the crop condition, soybeans quality is a lot better this year, but has worsened compared to the previous week. As of July 14, 8% of the crop was categorized as “Very poor” and “Poor”, compared to 7% in the previous week and 30% a year earlier. Meanwhile, 27% of soybeans fell in the “Fair” category, 1% higher than the prior week and below last years 36%. As for the premium quality, 65% was rated good-excellent, below the preceding weeks 67% and well above 2012s 34%.

Last week, the USDA raised its forecast for domestic inventories to 295 million bushels as of August 31, surpassing analysts’ expectations for a rise to 270 million bushels. This was 11% higher than the previous month’s projection for 265 million bushels.